March was the first time in 15 months that revenue growth outpaced expense increases, according to a report from Syntellis. The median hospital year-to-date operating margin in March was 0.4 percent, up from -1.1 percent in February.
Here are six nonprofit systems that drove operating margins back into the black in the first quarter:
1. Oakland, Calif.-based Kaiser Permanente reported $233 million in operating income for the first quarter, up from a $72 million operating loss in the same period 2022. Its operating margin grew from -0.3 percent in the first quarter of 2022 to 0.9 percent in the first quarter of this year. Net income for the first quarter was $1.2 billion compared to a net loss of $961 million last year.
2. St. Louis-based BJC HealthCare, a 14-hospital system, reported $59.5 million in operating income for the first quarter, compared with a net operating loss of $46.1 million one year ago. While revenues increased 16 percent, expenses rose 8.7 percent to total $1.66 billion. Overall income for the period was $180.8 million, up from a $91.2 million net loss last year.
3. Phoenix-based Banner Health, a 33-hospital system, transformed a $46 million operating loss in the first quarter of 2022 into a $128 million gain in the first quarter of this year. Operating expenses, though slightly higher than in 2022, were helped by a reduction in contract labor costs of $57 million, or 26 percent. Net income was $292 million for the first quarter compared with a $171 million loss in the same period of 2022.
4. Indianapolis-based IU Health reported operating income of $45.1 million for the first quarter compared to a loss of $29.8 million for the same period in 2022. After including the performance of its investment portfolio and other nonoperating items, the 16-hospital system recorded a bottom-line gain of $311.7 million in the first quarter, compared to a $358.5 million loss one year ago.
5. Cleveland Clinic posted $32.3 million in operating income for the three months ending March 31, compared with a loss of $104.5 million in the same period last year. As of March 31, its operating margin sits at 0.9 percent, up from -3.4 percent margin in the first quarter of 2022. Overall income for the 20-hospital system totaled $335.5 million compared with a loss of $282.5 million in the first quarter of 2022.
6. Neenah, Wis.-based ThedaCare reported $3.6 million in operating income for the first quarter, up from an operating loss in the same period of 2022 of $5 million. Overall, ThedaCare reported net income of $31.8 million compared with a $42.2 million loss in the first quarter of 2022. ThedaCare plans to merge with Milwaukee-based Froedtert Health by the end of the year, pending regulatory approvals.
